On January 1, 2012, the National Furniture Company adopted the dollar-value LIFO

Question

On January 1, 2012, the National Furniture Company adopted the dollar-value LIFO method of computing inventory. An internal cost index is used to convert ending inventory to base year. Inventory on January 1 was $200,000. Year-end inventories at year costs and cost indexes for its one inventory pool where as follows:

Compute inventory amounts at the end of each year: (You can copy and paste this schedule or use your own, but I need to see the computations)

Year ended Dec. 31 Inventory at Year-end costs Cost Index (relative to base year) 2012 299,000 1.15 2013 300,000 1.20 2014 351,000 1.30

Explanation / Answer

year Base year Cost index Current At dollar value LIFO 1/1/2012 200000 1 200000 200000 Year 1 layer 60000 1.15 69000 [260000-200000] [60000*1.15] 12/31/2012 260000 1.15 299000 269000 [299000/1.15] Year 2 layer -10000 1.15 -11500 [250000-260000] [ Depletion of last year] [-10000*1.15] 12/31/2013 250000 1.2 300000 257500 [300000/1.2] Year 3 layer 20000 1.3 26000 [270000-250000] [20000*1.3] 12/31/2014 270000 1.3 351000 283500 [351000/1.3]

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